Zakat is only due when your wealth reaches a minimum called the nisab and has been held for a lunar year. The nisab comes from classical measures of gold and silver, which is why there are two versions.
The two measures
- Gold nisab: 85 grams of gold.
- Silver nisab: 595 grams of silver.
Historically the two had similar values. Today silver is far cheaper relative to gold, so the silver nisab is a much lower amount of money.
How the choice changes the result
Net wealth
10,000 − 1,000equals9,000
Nisab
85 g × 100equals8,500
Zakat
9,000 × 2.5%equals225
With gold at 100 per gram, the gold nisab is 8,500, and wealth of 9,000 is just above it. With silver at 1.20 per gram, the silver nisab is only 714. Someone with 5,000 of savings would owe zakat under the silver nisab but not under the gold nisab.
Which to use
Many scholars and zakat organizations recommend the silver nisab when your wealth is cash or mixed assets, because it brings more people into paying and more reaches those in need. Others use the gold nisab. Whichever you follow, use today's price in your currency on the day you calculate.